PVT has got into this situation through a combination of a number of factors. There are certain indications to the fact that the PV Technologies had become complacent through due to its positive relations with the customer – Solenergy. The previous track record of selling to this company had created the impression with PV Technologies that they are going to gain this contract from their client and didn’t pay attention to the pricing element of their proposal. It would be unjust to ascribe the entire outcome of this situation of PV Technology’s management and salesperson because it can be reasonably expected that purchase criteria of a client, with whom a company has done repeat business, will remain unchanged. Greg Morgan and Solenergy as a whole has become highly price sensitive for this particular purchase decision. Part of the reason for becoming price sensitive for this purchase decision can be ascribed to the fact that this is a large procurement decision and involves very high level of commitment by the company.
1. What is the potential economic impact of pursuing this course of action, if pursued independently from the other alternatives?
2. Beyond the economic impact, what are the advantages and major risks associated with pursuing this course of action, specifically regarding factors that:
(a) impact the purchase decision and
(b) influence the customer relationship?
3. i)How did PVT get in to this situation?
ii) How have changes in buyer behavior, industry dynamics or other factors led to the situation faced by management?
iii) Is the situation merely a temporary “brush fire” or is it symptomatic of an important issue for PVT?
Explain fully your position and be sure to include key considerations, evidence presented in the case and any assumptions that influence your position.
4. What do you see as the significant, positive aspects of how PVT is managing its
Business/ Customers that would be useful in dealing with this situation?
5. What specifications would you recommend that management take to address the
Explain fully your rationale and how the effective implementation of your recommendations would create value for PVT’s customers and for PVT itself.
6. i) What are the major risks associated with the recommendations that you propose?
ii) How would you propose that management mitigate risks that you’ve identified?